In remarks that signaled a shift away from Argentina's decade-long stance as Washington's closest ally in South America, Duhalde called for the creation of a common currency with neighboring Brazil and for a united front against "protectionist" U.S. trade barriers blocking Latin American agricultural exports.

During the 1990s, Argentina embraced U.S.-backed economic policies and received the coveted "non-NATO" ally status reserved for countries such as South Korea and Egypt. But Duhalde's comments appeared to foreshadow a challenge to Washington's economic interests in the region.

Analysts say demands by Argentina and Brazil -- the region's third-largest and largest economies, respectively -- for a relaxed U.S. policy on agricultural imports are unlikely to be granted by Washington. This disagreement could derail Bush administration plans to establish a Free Trade Area of the Americas stretching from Tierra del Fuego to the Arctic Circle.

Duhalde is struggling to stabilize Argentina, which in recent weeks defaulted on part of its crushing $142 billion national debt and was forced to end the peso's peg to the dollar. This led to a 40 percent devaluation in the currency. The peso fell sharply yesterday, dropping to 1.95 to the dollar, from 1.70 Monday, as confidence in the currency continued to dwindle.

Duhalde said Argentina is now "one step away from anarchy," and as he spoke,

the country was hit with fresh outbreaks of violence by left-wing groups of the unemployed. They were protesting a widely disliked freeze on bank deposits,

which has barred millions of people from withdrawing their savings. The deposits are contained in a banking system that is owned largely by foreign financial institutions, including U.S. banks.

In mounting frustration, thousands of protesters rioted in three provinces yesterday, tossing eggs and smashing windows of foreign-owned banks. In the northern province of Jujuy, demonstrators smashed windows and destroyed computers and ATMs at BankBoston and Citibank. In Buenos Aires, thousands marched on the presidential palace demanding an end to the freeze, food and jobs.

To quell social tensions and maintain his presidency, Duhalde, a veteran senator, governor and vice president from the populist Peronist party, has promised to create jobs by protecting domestic industries stymied during Argentina's opening to foreign trade in the 1990s.

Duhalde's remarks during his first two weeks in office have raised alarms abroad that he may be turning away from free-market capitalism, a movement that could spread to other parts of Latin America.

Duhalde, however, said yesterday that he intended only to provide Argentina with the same kind of protection from excessive foreign imports "that any other successful country in the world now has."